Swift response to net neutrality proposals

The chairman of the Federal Communications Commission on Monday proposed stricter rules to ensure that wireless and wireline Internet providers don’t block or slow traffic over their networks, a widely anticipated move that drew swift criticism from the telecommunications industry.

In a speech before the Brookings Institution in Washington, D.C., Julius Genachowski outlined plans to codify and expand “open Internet” guidelines first endorsed by the FCC in 2005. The Obama appointee said that instances of carriers obstructing online telephone services, intentionally degrading peer-to-peer file sharing and preventing access to political content, threaten to stifle technical advances and compromise the free flow of information.

“We have an obligation to ensure that the Internet is an enduring engine for U.S. economic growth, and a foundation for democracy in the 21st century,” Genachowski said.

Telecom trade associations and free market groups generally portrayed the announcement as unnecessary government meddling with the potential to undermine investment and complicate the legitimate need to manage traffic, spam and malware.

Walter McCormick, chief executive of the Washington, D.C. organization USTelecom said in a statement:

We … remain concerned about the law of unintended consequences and a rulemaking that potentially goes too far. All Americans enjoy an open and free Internet today. And, I believe we all share the goal of ensuring our nation has a robust and innovative Internet in the future. The broadband industry is a bright spot for deployment, employment and economic growth, and we are committed to doing business in ways that are consistent with reasonable network management and transparency.

Ken Ferree, president of The Progress & Freedom Foundation, said in a statement:

I’m troubled to learn that the FCC is embarking on an exercise that would probably result in rules that are unconstitutional and almost certainly beyond the FCC’s statutory jurisdiction. Aside from the legal issues it raises though, I find myself at a loss to understand why the administration wants to start meddling with a sector of the economy that, despite a challenging macro-economic environment, is performing pretty well by any rational standard.

What exactly is the problem they are trying to remedy? Should they perhaps wait until they have a “Broadband Plan” in place before they start changing the rules of the road for the market? It’s almost as if they are trying to turn a story of success into one of failure.

David Cohen, executive vice president at Comcast, said in a blog post:

We welcome the dialogue suggested by the Chairman in his comments, and we completely agree that any consideration of new “rules of the road” begin with notice and an open, public rulemaking proceeding — this is both fair and appropriate.

But before we rush into a new regulatory environment for the Internet, let’s remember there can be no doubt that the Internet has enjoyed immense growth even as these debates have gone on.

The Internet in America has been a phenomenal success that has spawned technological and business innovation unmatched anywhere in the world. So it’s still fair to ask whether increased regulation of the Internet is a solution in search of a problem.

The FCC has had a “policy statement” in place since 2005 that sets expectations for “openness” on the Internet. We support and honor those policies.

The FCC’s original policy stated that network operators can’t stop users from accessing lawful Internet content, applications and services or prevent them from connecting “non-harmful” devices, such as smart phones. On Monday, Genachowski advocated additional rules to prevent broadband providers from discriminating against particular types of content or applications, by for instance degrading service, and to ensure that carriers are transparent about the way they manage their network.

Open access advocates and online companies like Google Inc. of Mountain View have long argued that allowing carriers to throttle traffic based on sites or applications creates de facto gatekeepers with the power to pick online winners and losers. They applauded the announcement on Monday.

“This is a pivotal moment for the future of the Internet,” said Ben Scott, policy director at Free Press, on a conference call today.

In particular, he said the rules would the stop telephone and cable companies from pursuing their stated intention of beginning to sell “prioritization or quality of service” to companies. Under such a model, the carriers would essentially say:

‘We can’t guarantee your application will work unless you pay us and then we’ll make sure yours work at the expense of others.’

That business model of pay for play . . . replicates the commercial market power that we have in every other dominant media form (including radio, television, magazines and newspapers). It reverses the most exceptional and dynamic thing about the Internet, which is that it is open.

Vint Cerf, vice president and chief Internet evangelist at Google, said in a blog post:

To some it may seem like an esoteric issue, but this boils down to protecting the Internet as an engine for innovation, economic growth, social discourse, and the free flow of ideas. Preserving non-discriminatory access also has the virtue of protecting consumer choice, ensuring that an Internet access provider cannot block fair access to any application provider on the Internet. We could not be more pleased to see Chairman Genachowski take up this mantle, and we look forward to working with the Commission as it finalizes its plans.

The Internet was built as an open platform, which means that the creators of new services and content do not need to seek permission from carriers or pay special fees to be seen online. This “innovation without permission” effect has allowed countless individuals and companies to offer new applications to the world, businesses large and small to open shop online, and anyone with an Internet connection to share their opinions freely in the marketplace of ideas. It’s not until recently, in the wake of dogmatic deregulation, that this open environment has come under threat.

If consumers had a wide choice of broadband service providers, preserving an open Internet might not be such a critical issue. Unfortunately, the vast majority of Americans have few (if any) choices in selecting a provider. As a result, these providers are in a position to influence whether and how consumers and producers can use the on-ramps to the Internet — and we’ve already seen several examples of discriminatory actions or threats that impair openness.

Allowing a handful of broadband carriers to determine what people see and do online would fundamentally undermine the features that have made the Internet such a success, and could permanently compromise the Internet as a platform for the free exchange of information, commerce, and ideas.

The net neutrality debate has heated up in the wireless arena in recent weeks, as controversy swirled over Apple Inc.’s decisions to block various applications from its popular IPhones. Notably, it denied the Google Voice app, a potential competitor to Apple’s carrier partner, AT&T Inc. Similar disputes have arisen over smart phone makers discouraging the use of their devices as wireless modems for laptops. How the proposed rules would affect these issues will depend on their final form.

Ryan Radia, information policy analyst at the Competitive Enterprise Institute think tank, said in a statement that intense competition in the wireless space is already fostering innovation:

Wireless industry players are disciplined by intense competition: Virtually all U.S. consumers can select from four competing national carriers and dozens of regional carriers. Carriers are investing tens of billions of dollars annually to upgrade their networks to offer faster speeds and better coverage. In the next few years, several carriers are set to launch Long-Term Evolution networks, also known as “4G,” which promise vastly increased speeds and capacities. Price competition among wireless carriers is also cutthroat, as evidenced most recently by Sprint’s “Any Mobile” announcement.

Open and closed handsets coexist already: Open source handsets that run Google’s Android operating system can be purchased today by AT&T, T-Mobile and Sprint subscribers. Verizon Wireless is expected to launch one or more Android-based devices this fall. Android device owners can download and install apps from any source, with no “gatekeeper” or mandatory developer approval process.

Consumer attitudes toward “openness” are diverse and ever-changing: According to a recent Zogby International survey, many consumers are not especially concerned about whether their phone is open or not, but instead prefer handsets that are affordably priced and offer good coverage. On the flip side, some tech-savvy consumers care deeply about open applications and content. Competing wireless carriers, not FCC regulators, are best positioned to meet the evolving preferences of various wireless market segments.

American Cable Association CEO Matthew Polka said there’s a more critical topic for the FCC to focus on than open distribution: content neutrality.

For the last few years, some in Congress and at the FCC have been pushing for rules that would prevent broadband service providers, particularly the larger ones, from operating their networks in ways that would unfairly prevent consumers from accessing all lawful Web-based services and applications. However, during that same period, some Senators, House lawmakers and FCC Chairmen have been missing the far greater threat to the ‘Open Internet’ ideal, which is how media conglomerates and Web giants are using their leverage to assure themselves preferential treatment on the networks of Internet service providers at the expense of other Web-based services, applications and consumers.

ESPN360, owned by the Walt Disney Co., is pioneering such a closed Internet business model, under which broadband service providers must pay ESPN fees based on its total number of broadband subscribers, forcing those who have no interest in viewing sporting contests over the Internet to subsidize those who actually want to access ESPN360 on a regular basis.

Genachowski invited feedback from the industry, consumers and others, and said the FCC will hold public workshops as it begins the rule making process.

“This is not about government regulation of the Internet,” Genachowski said. “It’s about fair rules of the road for companies that control access to the Internet.”